spiral-bound book is your guide with contact information for every member of congress including bios and committee assignments and also contactinformation for state governors and biden administration cabinet . preorder your copy or scan the code with your smart phone. every shop purchase helps support thenonprofit operations . >> bipartisan policy center, jason joins us now for a conversation for president biden's fiscal proposal and the larger federal budget process. on trying to digest this budget and all of thesebudget documents this one particularly checks in at1400 pages . as you look at these , what are the hallmarks of a good budget, a good federal budget of and one of the hallmarks of a bad federal budget . >> thanks for having me on the show, good to be here today.

i know the public looks at these 1400 pages and wonders how do iunderstand this . i wanted to pull back on the politics and think about the process and what makes it a bad budget and it's really important to think about how we look at these budgets. so let's start with the good. this is a $5.8 trillion budget, that's a spending so don't forget there's $4.5 trillion not in the economy and you can't just focus. i think from the good standpoint the president has to think about how we can rollback the deficit and in the narrow framework met again. there's also an area about needing to pay for these studies and we can talk about that later in the segment and there's also a shift to policies that are more in moderate nature, we're moving

away from some of the far left policies that were divisive that could've intruded on his approval ratings and led to problems. there was a shift there.or that's really good. the bad, there are no major spending performances. we still have trillion dollar deficit every year and the public debt will continue to grow every year. at the end of the 10 year budget there will be almost $40 trillion. about $25 trillion for social security. interest will be $1 trillion a year. that is what we spend right now on social security benefits. the deficit, and share pdp will be about four percent. we're basically double that

and then spending is a long-term share of gdp is up 24 percent and even with with the proposed increases in taxes, revenue is about 19 percent gdp. we got that 45 percent throughout the budget window. what is the ugly? parts of the budget that are out of date already, the interest rate assumptions in the president's budget are already out of date. current interest rates in the treasury are higher than what they are in the budget and the federal deficit has re signaled they will raise interest rates one more time which means all the interest rates are already invalid in this budget. the deficit reduction the president is touting mostly comes from released spending, they spent a lot of money in the past two years. that contributed a lot to find deficits. we're not spending that anymore, they're taking credit for reduction in deficits that are pandemic related. and then lastly on the ugly side, there is no mandatory spending increase proposals.

there's a lot of spending increases talked about in the narrative but there's no reform reproach and we need to keep this in mind because the trust fund for medicare will be depleted in 2024 and social security will be in the early 2030s so there's a lot in this budget that is in a narrative framework and it's important to think about this what is it supposed to do and it has two main functions. it assesses the priorities of the administration and how the government spends money it's also messaging about what the administration values and what its priorities are and that's a political statement so it's both a political document and in budget for spending. >> the good, the bad, the ugly we love to hear what viewers think. phone lines as usual democrats 202-748-8000, republicans 202 48 8001, jason will answer some of

these questions but for our visual learners let me put them up on the screen. $5.8 trillion in spending including 813 billion for defense, 1.4 trillion in deficit spending, deficits would total $14 trillion over the next 10years combined . the debt would grow from 22 trillion in 2021 to more than 39 trillion by the year 2030 and those are some of the numbersfrom this budget . here are some of the numbers the white house budget director focused on in presenting this budget to members of congress yesterday during committee . >> under the president's leadership our country has made historic progress to face these unprecedented challenges. t we created 6.5 million jobs in 2021. the most our country has reportedin a single year ever . our economy grew at 5.7 percent, the strongest growth

in nearly 40 years. the unemployment rate has fallen to 3.8 percent, the fastest decline in recorded history. and the deficit is on track to drop by more than $1.3 trillion, the largest ever one year decline. this progress was not on accident. it is the direct result of this topresident strategy to combat the pandemic and grow our economy from the bottom up and middle out. the president's 2023 budget details his vision to expand on that progress and deliver the agenda he laid out in his state of the union to build a better america, reduce the deficit, reduce costs for families and grow the economy from the bottom up and middle out. >> on that statement the o progress she talked about their would not was not a result ofthe policies of this president, what do you think ? >> i think that's a little misleading. a lot of deficit reduction

that the director mentioned is because we are not spending as much and i think this is important to realize when we're going through the pandemic and the government was sending a lot of money on how tax credits , on howstate and local support, financing , this was a response from the lessons learned in 2007 that the federal government had to step up and you really can't blame a president whether it be president trump or presidentbiden for giving money to businesses and individuals and helping the economy when it's needed . that's saying that's the president's problem would be misleading, taking credit for not spending more money after it was over is also sort of misleading and think of those job numbers. we had massive job loss. we were forced to have homes and businesses close down and you can't blame president trump for those job losses so we're bouncing back up. but this is part of whereit's a clinical document . the presidents taking credit

for this these things but what he didn't hear in that statement is that we have inflationrunning near almost 8 percent and inflation is running the highest it's been in 40 years . that was missing from the statement and inflation eats away at power so one of the th interesting things about this budget is when you think about the increases offered for various programs including defense, the actual purchasing power of those dollars declined and in a real sense there will be a decline in purchasing power so it's important we talk about how it's not partisan. >> republicans quick to point out that the issue of inflation . just minutes after the governor giving her opening statement, this was jason smith, ranking member of the housebudget committee responding to her . >> now we have president biden's fiscal year 23 budget, a proposal that deliberately makes every

crises american families are facing akbecause of president biden and the one party democrat rule in congress, that much more. american families are facing a spike in prices not seen in this country in over 40 years . eight $3500 inflation packet on every family in america just last year alone. the presidents budget keeps the reckless spending going on. doubling down on the delusion that the answer out of inflation is to spend more money. this proposal spends $73 trillion over the next 10 years. >> that was jason smith yesterday. policy center joining us to have this conversation. on inflation, how do you fix that ?

>> in a sense yes and no and this is where again you'vegot to be fair to the president on both sides . give him credit for saying he shouldn't get credit for and we also need to call out when republicans are giving them grief for things they have no control over especially in the short term xeand inflation is one of those mixed things. it's contributing to inflation, high gas prices are really consumers go to the pump every week. two issues going on, obviously the war in ukraine will affect gas prices and i don't think we want to back off on ukraine right now in the face of russian aggression. we should stand up when it comes to other issues for inflation a lot of it right now is still a backlog on bills, that's not president biden's fault there's only so many things you can do to release the backlog . the administration is trying , they're decreasing supply chain issues and removing

those barriers but those don't happen overnight and thinking about investing in more rails, you can't build those overnight. this is a long-term investment and the president is doing that . to pass the infrastructure bill last year on a bipartisan basis which opel parties can come together when there's a need for americans in this country we should point out where they were together and give and give them both credit forthat as well inflation can be reduced . we need to do this and a lot of supply chain, i'm hoping as long as there's not another variant that comes through that we might be out of this by theend of the calendar year . that includes why my colors are so expensive. >> always happy to give credit. jason fichtner, vice president there, chief economist joining us for the next half hour taking her phone calls. let me get two of those, kathleen in chicago,democrat, good morning .

>> i got three questions. i want to know why the republicans can jump on board and it comes to spending our money, our tax money on foreign countries being be it monetary aid or military aid. just come up with money just like it grows on trees but when it comes to the people here in america that's actually worked in this country and paid taxes, they even want to help to build back better in america. i don't understand and we always heard about the deficit. it's not so much the deficit coming from the american eagles money being spent, look what we're doing for ukraine. 16 billion in one month. where did that money come? you're always declaring about what this president is trying to do to help people, we've got people in this country's let's focus on that question, david. >> it's a really good point to bring up and talk about

what we spend money on. there's an old joke amongst us budgeteers at the party in the minority is the party of responsibility and when republicans come into power and want to spend money on taxes and when their party is in the minority they talk about debt reduction . when the parties in power they like to spend money. we need to talk about what the priorities are and whether that is a priority for one type of spending for things like ukraine and helping foreign countries coded relief we should talk about what we weneed when it comes to pandemic relief, are going to run out of money . are we going to have another pandemic serves, do we need to stockpile? that requires a conversation and getting into what we do for social policy reforms, childcare needs, paid family leave. what do we do aboutmedicaid . these are all part of the discussion but realized that

money isn't free. i don't think we can create dollars out of digital currency and that's the important thing about not just the spending but where that money comes from because money that comes from that is money outof the american people's pockets . that's going to create distortions and investments so if it's done by borrowing, it can count up other business activities so we need to have this nuanced discussion and unfortunately a lot of people are angry. >> more numbers from president biden 2023 budget proposal released on monday. $5.8 trillion total, 803 trillion on national security including 773 billion from the pentagon and another 682 billion to ukraine 7 billion more towards nato and

european allies. 82 billion in the proposed e budget for funding over the next five years. some $18 billion for climate reliance programs, $17 billion for law enforcement programs.again those are some of the timeline numbers . this is brian of brockton massachusetts, democrat, good morning. >> i had four points i wrote down here. the rich get retirement age and don't need their social s security benefits . i don't know how many people are on this but i'm sure there's some here that have paid into it all their lives and they adjusted when they don't need it. the failure to raise the social security tax on the wealthy which is ridiculous, congresses failure. the burial your will allow medicaid to negotiate the drug costs which is ridiculous. many other countries do it.

canada, uk with success, why do we pay so much for drug costs when we shouldn't . you made a statement that trump can't be blamed. trunk can be blamed for everything and my last point was i'm drinking tap water that i know is not safe and i can't afford to buy states drinking water at the supermarket on a regular basis and that's part of my story so we're practically a third world country and the bridgesare going to start falling down . many in america ours falling down. the spending this country needed, we are looking like a joke. and the divisiveness is really not what is needed. >> brian in massachusetts. >> just a general response, he has some really good points. one, we do need to focus on disability both with spending and rates to make it more

fair and also giving us benefits to those who need it and making sure those benefits don't start there. medicare and prescriptions, it's interesting the federal government can negotiate their prescription drugs and we should think about what that means because there's a willing buyer and a willing seller and we should have some negotiation. there's a lot of more nuance there and we need to fix that . inflation drinking water, infrastructure we haven't spent what we needed to. how long do we have infrastructure needs, what was going on for four years, it's past time we had passed but we've now got it past to reduce but it will take time. and then the last thing i'd say is we have divisiveness

in this country, i'm very concerned about that as an economist. a people start blaming president trump for everything and i don't think it's constructive . we need to really focus on what we can do to come together to fix the problems we have both from an economic standpoint. >> the caller talked about raising taxes on the rich, what are your thoughts on that proposal in that budget, a 20 percent minimum tax on households worth $100 million or more, estimates in this budget by the white house that would create $360 billion over the next 10 years. >> i don't think that's the best way to do it. one of the concerns as a taxi economist we talked about when you tax things we do something called the realization principle but if you and i go out and we have to wage and hour employer pays us we realize it and in this wage if we have capital gains, that brings cash into

us and we realize some sort of gain that we can get paid. taxing unrealized gains really isn't efficient and allows for a lot of gaming. it also conflicts with assets to pay a tax even though the president'sproposal has the ability to carry things over for nineyears, maybe charge interest on it . there's a lot that comes with it . it's good political rhetoric but you really want to think about better tax policy that are more targetedtowards those who can afford it and are wealthy, figure out what their spending money on . taxing things like second homes or one-time payment for transactions on a certain investment when they're actually sold and bought and those that try to test unrealized gains, we need to be more nuanced about the incentives and disincentives. i'm pretty sure the

presidents focusing on spending but the tax proposals he put forward i don't think are workable and i'm not a lawyer but from the tax standpoint as an economist is not the most efficient efficient way to raise revenues . >> 20 minutes left with jason . the policy center, it is jj fichtner on twitter if you want to follow him, his work@bipartisanpolicy.org is where you can find it . thisis bob in michigan, independent . >> i'm kind of interested to see the defense budget went to $813 billion in this, it was initially pegged as 783 billion. is there still any kind of auditing system all the pentagon to, and it isn't just the pentagon. hcw is another one and both

of those are too hard to budgetary expenditures about tax dollars. is there any ongoing, are there any ongoing audits of either one of those agencies because you know, jumping up $30 billion from your initial p budget seems just outrageous to me. without some sort of auditing process. could you comment on the audit process, ongoing auditing process of these two agencies please? >> i'm happy to do so. you bring up a good point but the short answer is answer yes. long answer is are they effective, notreally . there's a hard time for the federal government to track all that money and they're trying to do better in where defense money is spent.

data.gov is a resource to go 'on and it's a complicated challenging process where the defense department department has always had problems with their audits because you're an accountant that goes and looks at the unqualified audit and say we can't find things, dod gets a lot of qualified audits and it's frustrating. and part of this also goes to a budget process. you think about the budget and a nonpolitical, how much do i have, how do i plan to spend. we just taxed the budget which is not a 12 year budget basically sidelined 12 months out before the end of the year and dod's contracting, it's hard to track that in states. i'd like to see a better job and they're aware of this issue, they been aware for a lot of long time and it's a big problem and i appreciate

you bringing thatforward . >> married in lasvegas, democrat . >> good morning. the former president according to i believe it was senator say i said trump spent money like a drunken sailor. we have this big tax cut to put lots of money in billionaires pockets and he went to mar a lago and boasted how he made them rich . now you've got a senator in florida, scott who wants to eliminate social security and medicare within five years. that's rich coming from someone who will probably get a $7000 a month pension when he retires . to deprive people of the 16 or $1700 a month yet they contributed to. that they rely on to live on. and n i don't know, this

spending, he had to be spent during the pandemic. people were in food lines so naturally, we're going tohave supply chain issues . kind of china had a lockdown again. so yes, we have big problems because we had a unique situation and now we've got it compounded with the war in ukraine. >> david dicker. >> those are excellent points and what i'd say is the caller is ccorrect that there are unique unique circumstances that led to increases in spending and inflation that again is a nice nuanced way of pointing out we have to have patience in getting through this, figuring out we can where we can best spend our resources to reduce these supply-chain backups and realizing the money was spentfor a reason . we were in a pandemic and this is a global emergency. were not criticizing that the money was spent. we can debate whether it was

spent at the right place but youhave to have a response and it had to be done . we're not spending that much money through the pandemic so because of that, the war in ukraine will have inflation. the american people we need to be patient about what's going on and focus on where these reforms need to happen in the long term to get us where we want to be. >> as we come up to 8:30 on east coast we have this budget proposal now. for my viewers remind viewers what's supposed to happen when it excomes to passing a federal budget and perhaps what is likely to happen. >> i think it's important to point out that this is something we didn't talk about earlier but when we talk about the budget of $5.2 billion budget, 4.5 trillion in revenues being taken out and tax dollars, think about what percent is on automatic pilot. mandatory medicaid that's 71

percent of the budget, 29 percent is discretionary and goes to things like education , when we talk about what happens on capitol hill i guess that's what their budgeting is that 29 percent is 5.8. the rest is on automatic pilot e must medicare, medicaid so now you go into this discussion every 29 percent etc., what's supposed to happen? the president is supposed to submit the budget the first monday in february.the congress is supposed to get together, house and senate and pass a budget resolution by april 15, that's two ways to weeks away. they're not going to make that deadline so it's an appropriations spending has 12 subcommittees, and they are supposed to pass in the house and senate 12 appropriations bills . come prtogether and get all those past 12 separate bills

by september so by august 1 that's supposed to be done. that's what's supposed to happen. the likelihood of that happening is very slim .the last time we had all 12 appropriations bills at one time was in 1996 for the 1997 budget. the budget process is not working at this point and it's time to think about that. >> .. wh maybe look at fun, maybe not but likely not all. by september 30, they will pass going, we've seen this multiple times the last few years. probably get them to the midterm

elections in november and come back for the rest of the year. that's my guess if they are clumped together, one big giant belt together, it will take two or three from one and two or three from another. but the idea of budgeting in the traditional t sense, it's a lost art. >> how would you change the budget process to make it work again? >> let me add a few things. i would change to the budget, and out there are pros and cons to any proposal but right now we are doing the budget process every year end it's not working. i'd rather seek the budget the first year afterti an election d the second year in election-year. the budget is not locked into thefo numbers, there can still e passage on the foundation budget but there's also long-term

planning, one think you don'tno see is there's nothing going to be the long-term plans for my ten year budget window. look at 2030 years out and better enforcement and have deficit reduction targets, they don't work very well and the process right now in the budgetb in february, it happened, no one knows to budget jail if the budget is not in on time but proposals put in place, they would have that. the reconciliation process is also broken, members of congress in the house and senate to pass legislation, it no longer does that. they could use the targets and the gate is i open and

reconciliation is used to pass legislation. that's increase and let's go back and focus on reductions which could be on the revenue side or close let's have continuous focus on reduction, $40 trillion in fact a lot of money, i know one last thing, what does it mean? think about what 1 trillion actually looks like. you had 100-dollar bill a small half inch thick hundred dollar bill$1 you could put in your pocket. truly worth of 100-dollar bills and would take an entire football field but 120-dollar bills. you're going to do when trillion of back pallets 100-dollar bills? that's what we are talking about, it has impact on the

economy in future generations have to pay it off. we need to focus again on deficit. >> this is larry, good morning. >> good morning, america. good morning, jason. i have a problem with what you said about donald trump and how he did so much. we've hired president biden. we have president biden to call, everything biden has done we passed donald trump, it belongs to this. in other words, this president has an agenda. what he did was come in knowing he's got to get rid of the pandemic so we can all go to work number one. we all knew that, we were out of work for one year and knowing in one year all of us were out of

work, everybody so we came with this package between trump and biden to help the american e,people and the economy started throwing. now the social security you are talking about, any time one american is working o on a job, they pay out social security fou that one person. now from that time until he's 65 years old, he can't retire with that social security but this is the kicker. you said social security was running out. i'm talking to the people now in america, 18 to 55 years old, let them know the 1932 when he started the social security,

it's a revolving door where everybody works and pay into social security and when they retire, the reason social security is going out is because the people are taking that money from social security and giving and they are not putting the money back into our social security. >> will let jason talk about that. >> there's a lot to unpack my two quick points. i'm not an apologist for defending donald trump. to be clear butn i figure it's important from the citizens view in this country that we don't attack presidents on either side of the party. just be honest about what presidents can't or cannot do. it's not fair to blame president biden for the gas prices, that's not fair resident trump did a

good job on things like operation warp speed, getting vaccines to the market. we need to be responsible where presidents did a good or bad job. i'm not defending the actions of the president but i want a civil honest discussion on what worked and what didn't. donald trump got fired and hired.nt biden brought it's important to realize thehe dependency ratio, workers from .three workers paying for one beneficiary now it declines over time and we are getting closer to that ratio and the trust fund as you said invested in treasury security, the government is still calling itself, the federal government owes social securityso trust fund assets in those assets are now being used to pay benefits right now. that will run out in the early

2030s and means social security is not bankrupt or going anywhere so they can pay out and benefits. it covers about 75% paid when social security is short. we'll probably get to that and i know there are some working on it and trying to figure out plans to figure something before we get to 2030 but if nothing happens, it's introduced automatically. toi don't that's likely, i think congress will step up and do something but the question is what? the longer we wait, if we bring honest, they're not going bankrupt and they are going to be depleted. on the benefit side, the earlier ones say weo don't need it and e need to figure out the appropriate amount and those who do need it, make sure there is

enough support their and increase taxes on the higher end. we need to start doing that now, not wait ten more years. >> we went over the numbers in the budget, projections out ten yearsye that in 2032 the federal debt could be $39 trillion. how much debt is too much? >> i have been for years. the question is, when two people by our instruments are no longer good investments? right now where else are you going to put your money? you are not going to put it in russia or south america. maybe a bit in canada they don't have the time to absorb the demand so we still are the best welooking country even though or

fiscal position is the project. we have more debt than our economy and gdp ratios over one 100% and what we like to see over time promote the deficit and gdp is around 4%, most economists want to seek to percent. we want to make sure lower -- [inaudible] by increasing debt needs not just reducing deficit but where we've got some surplus from the previous debt and that's hard politically to do so we need to think of ways to reduce the deficit down to zero and increase growth set over time over the course of decades. it's not going to happen overnight but we need to work on the. >> jason with us for a couple more, one or two more phone

calls of the bipartisan policy.org if you want to check out his work or follow him on twitter. this is allen in indiana, democrat. good morning. >> good morning, thank you for taking my call. love watching journal, best show ever on cable tv and i thank you for that. i'd like to ask for my he was talking about inflation, like a 7% higher since 1980, you know what the inflation rate was in 1980? >> it was more than it was now. you look atpa the mortgage rate paying 14 to 16% on mortgage rates so if you're trying to say been worse, you are correct. that's something to keep in mind, too, low interest rates for a significant number of years and we've gotten used to it, it's important to keep that in perspective if we go to three and a half% inflationary figure

figure that would probably seem good you'd get it down to 3.8% over time, economic growth, that is sustainable so you're right to say this and we had it for inflation. i do think it's going to be leveled out and go back to normalcy but that will probably take several months. >> democrat, good morning. >> hello, thank you for taking my call, enjoy your conversations. talking about inflation, i think everybody is aware inflation started beforeta the invasion ad inflation is always monetary soleimani printing from we have to consider interventions the federal reserve has been doing

and the stimulus we produce 40% of the current circulation of dollars, i believe it printed 2020, inflation a serious issue and i believe inflation is being drastically underestimated, i believe it the metrics we used to catholic m inflation has been changed eight to ten times the 80s and there is a great guy, you've got to get him on your show, jon williams gives you the correct inflation measures before the adjustments were made. if you were to measure inflation like in the 1980s, it would be about 15 to 20%, it wouldn't be seven to 8%. >> what do you make of that? >> i appreciate the color, inflation is everywhere and

always a monetary phenomenon and that's important with inflation, too much money in fact can be both not the volume of money as well as restrictions of the supply of goods because of covid so back is something to show so appreciate your bringing that up. this becomes what we do going forward? the federal reserve putting the market a lot of dollars in financial engines going in banking and credit, it's important and not the federal reserve will do a balance from a they are trying to land the airplane in the dark by raising interest rates to slow the economy and that will be tough. trying to figure out howow we pl back on this in the monetary policy while allowing the economy on the supply chain issues will be a balancing act. that is what inflation comes down to and what it means to

them is what they spend money on. if you don't drive a car or pay for gasoline, he won't seek inflation. the american people see where they spend, plant and water and food the concern i have with inflation, i know we are running out of time, it's the public sees inflation to be permanent and they will ask their employers for higher wageey increases which goes to hire prices and the spiral keeps going so the federal reserve really does have to go down on the easy money policy and they are saying the right things but the question if it's too short, too late. we will only find out hindsight. >> we will have to edit their but we will have you on later. bipartisan policy center, bipartisan policy.org, thank you for your time.

>> thanks for having me, appreciate it. >> the senate is in recess to allow senators to attend a briefing by biden administration. they will return 4:30 p.m. eastern. develop on nominations for the export import bank health and human services department, watch live coverage of the tenant here on c-span2. >> the conversation in the distribution of pandemic relief fund, when and how often they have fallen into the wrong hands. sean is the -- arcus, senior policy analyst government oversight. first on the project on government oversight, how long have you been around and how long are you from the? >> we are a nonpartisan nonprofit, basically a watchdog group trying to get government more open and accountable and efficient and effective with the money. i spent the oversight